Methods of Processing Information in Solar Energy System

ABSTRACT

A sales method provides for the demonstration, performance forecasting, financing, leasing, renting, power purchase agreement, tax-advantages, and group benefits of complete renewable energy systems. Even before a sales call is attempted, a system integrator has arranged a special group of lenders and investors that will fund any project initiated, has engaged credit services to check consumer credit files, has collected operational data from a number of its own systems, has created forecast models of performance, and arranged open-membership groups to which a new user can join immediately to share in collective bargaining with utilities, spread down-time risk and expense, utilize tax incentives, etc.

FIELD OF THE INVENTION

The present invention relates to renewable energy industry businessmethods, and more particularly to sales methods for completing thedemonstration, performance forecasting, financing, billing, leasing,renting, power purchase agreement, tax-advantages, and group benefits ofcomplete renewable energy systems.

DESCRIPTION OF THE PRIOR ART

Resources like coal, oil, and natural gas are not renewable, the knownreserves are being consumed rapidly, and burning them and transportingthem is a major cause of pollution and environmental damage. So, manypeople in general, and governments in particular, are looking for waysto get renewable energy systems launched and into mainstream use, bothfor profit, and for the environment we all share.

Market revenues for solar, wind, biofuels and fuel cell cleantechnologies were $55 billion in 2006 and are expected to grow to $226billion by 2016, according to industry research firm Clean Edge (March2007). The federal government, utility providers, and city, state, andlocal agencies are offering incentives to make renewable energy moreaffordable for consumers. As a result, the investment market in theUnited States for energy efficiency is estimated to be $200 billion,according to the American Council for an Energy Efficient Economy.

Photovoltaic (PV) solar systems cleanly and silently convert sunlightinto electrical energy. System integrators can install solar panelarrays at the point of consumption, e.g., on a customer's roof or intheir side yard, to avoid transmission losses and costs. In addition,the electricity produced may be fed back to the utility grid at retailrates, which tend to be much higher than wholesale rates.

When exposed to strong light, the semiconductor devices in the panelsproduce low-voltage direct current (DC) electrical power, which is thenconverted to normal 110/220 volt utility-type alternating current (AC)by an inverter. The amount of energy produced by a single installationcan be a substantial percentage of, or exceed, that used by a typicalhousehold. But, the up-front investment costs are very high, and thepay-back period is very long. The average American cannot afford theexpense, nor deal with all the technical and legal complexities involvedat the start.

Tax incentives can soften the up-front bite, but they are difficult tounderstand and take advantage of, and the government is forever toyingwith the terms of qualification. Many other technical and legalchallenges also exist, and many local city building departments andlocal building trades lack the education, skill and training necessaryto permit or do the construction. So, many potential owners who areleaning toward installing a renewable energy system, get discouraged anddo nothing.

Typical residential systems retail for roughly $9-10 per watt DC. Anaverage home may be able to support panels capable of supporting aninstallation of 4-5 kilowatt (kW) DC, which gives a total system cost of$40K-50K. Commercial systems can range from 5-100 kW DC, or more.Commercial installations are typically financed by third parties,leased, or the subject of a Power Purchase Agreement (PPA) or energyservices contract. But, homeowners almost always pay cash for theirsystems, from savings or a home equity line of credit (HELOC) or otherdebt-like instruments. This large capital requirement further restrictshow many homes actually get a solar system installed.

As a rule of thumb, each installed DC kW will produce roughly 1,500 ACkilowatt-hours (kWh) per year. Such can vary by latitude, rooforientation, weather, etc. Depending on the season, time of day, andlocal utility tariffs, a customer can expect to pay $0.05-$0.35 per kWh.Customers with large houses in hot climates tend to have significantelectricity bills due to heavy use of their air conditioning systems;summer bills can easily exceed $400 per month.

Utility customers can use the solar output to reduce their use ofutility power, and in many areas can sell back excess power to theutility.

Federal, state, and local governments, utilities, and agencies have putin place significant financial incentives for organizations that installsolar systems. Such incentives can offset the initial capital investmentrequired to get an organization up and running on solar power. Inaddition, many states have created programs to encourage the switch tosolar power. California, New Jersey, New York, and Arizona all haveinnovative programs, and other states are quickly following suit, e.g.,see, Database of State Incentives for Renewable Energy (DSIRE)(http://www.dsireusa.org/).

For example, the California Solar Initiative (CSI) is an incentiveoffered to help commercial, government, non-for-profit and residentialcustomers acquire and pay for renewable energy systems. The type ofincentive awarded by the program depends upon the size of the systeminstalled. Most government and non-profit organizations are eligible forperformance-based incentives that are paid in monthly installments basedon the expected or actual recorded kWh of solar power produced over afive-year period. The more solar energy produced, the higher thepayment.

At the federal level, tax-paying system owners are currently eligible torealize up to 30% of the system cost as a tax credit against theirfederal tax. Alternative minimum tax is not offset. The credit isgenerally not available to foreign entities, government agencies,non-profits, and non-US-taxpayers. The credit is presently capped at$2,000 for residences.

Each system owner is generally also allowed to take five-year MACRSdepreciation, with a tax basis of 85% of the system cost. But,homeowners in particular cannot depreciate any elements of theirresidence. The current federal tax credit is set to expire at the end of2008, unless an extension is passed.

The California CSI program provides for rebates to the system owner,based on the owner's tax status and the size of the system. Largesystems receive a Performance Based Incentive (PBI) rebate over fiveyears, based on actual kWh production. Smaller (<50) commercial andresidential systems receive the rebate as a lump sum in an ExpectedPerformance Based Buydown (EPBB) almost immediately after the system isplaced into service.

These rebates are reduced in steps as more people participate in theprogram. The current status can be found online at www.sgip-ca.com. Somelocal municipal utility companies do not participate in the stateincentive program, while others promote their own unique incentivestructures.

In other states and utility districts, such as Oregon or North Carolina,incentives may include state tax credits, while in other locales, theincentives may be based on the RPS incentives or other methodologies.

In both California and Federal programs, the system must be held by theoriginal system owner for at least five years to claim the full taxcredit. Early transfer may result in an IRS recapture of a pro-ratashare of the credits the benefits.

Data on recent applications to the CA state program, (seewww.sgip-ca.com), indicate that system integrators, not homeownersthemselves, were the largest residential installers in California in2007 YTD, both in terms of number of deals and kW installed. The dataalso provide useful reference points on $/W rates across the industry;$9-10/Watt seems fairly typical.

Companies like MMA Renewable Ventures and SunEdison are now providingthird-party finance solutions for renewable energy projects. Thesecompanies are investing in solar, wind, biofuels, biomass, biogas, andgeothermal energy generation. MMA Renewable Ventures says it is able tooffer customers and energy project developers substantial, consistent,reliable investment capital to meet and help drive growing demand.

Such companies enable customers to take advantage of predictably pricedclean energy, and to overcome the prohibitive costs of installation andongoing system maintenance. In a third-party proprietary financingmodel, a company such as MMA Renewable Ventures owns, operates, andmaintains renewable energy facilities. It sells the electricity to itscustomers under the terms of a solar services agreement (SSA) thatcontracts the electricity produced at a fixed rate. Other companiespartner with top-tier investors, project developers, and customers tobuild distributed clean energy generation plants. They then sellelectricity and, optionally, renewable energy credits to a site-hostunder a power purchase agreement (PPA). By offering comprehensive energyefficiency project financing, customers avoid up-front costs, andprojects are often cash flow positive from the start of commercialoperation. [note: do we need to address the likelihood that we'll becharging a “down payment”]

SUMMARY OF THE INVENTION

Briefly, a business model embodiment of the present invention comprisesa solar power installation with solar panels to convert sunlight to DCelectricity, one or more inverters to convert the DC to AC electricity,and a metered utility connection for selling to or offsetting energycharges for AC electricity from an electric utility. A monitor withsensors and connections to the inverter provides system operationmeasurements and data through a wireless or wired connection theInternet. A centralized server collects measurements and data from manysolar installation monitors and analyzes the inputs to provide usefulinformation to the users and their systems integrator and third parties.In particular, such information is employed in several ways to conductvarious parts of a solar energy business.

In one aspect of the present invention, a renewable energy industrybusiness method and sales method provides for the demonstration,performance forecasting, financing, leasing, renting, power purchaseagreement, tax-advantages, and group benefits of complete renewableenergy systems. Even before a sales call is attempted, a systemintegrator has arranged a special group of lenders and investors thatwill fund any project initiated, has engaged credit services to checkconsumer credit files, has collected operational data from a number ofits own systems, has created forecast models of performance, andarranged open-membership groups to which a new user can join immediatelyto share in collective bargaining with utilities, spread down-time riskand expense, etc.

An advantage of the present invention is that a maintenance businessmodel is provided that looks for operational anomalies that couldindicate trouble or developing problems. Remedies are provided thateither fix the problems using remote communications, or send repaircrews to take care of the problem.

Another advantage of the present invention is that a sales businessmodel is provided that provides information that can be used to sharpenpricing formulas and product performance forecasts.

An advantage of the present invention is that a performance monitoringbusiness model is provided that is accessible by the user to see howwell one's own system is doing, and to check on and control their ownenergy production account.

Another advantage of the present invention is that a renewably energycertificate business model is provided that accumulates the small sharesof qualifying energy produced by many small solar installations into theminimum unit sizes that can be certified, traded and sold.

An advantage of the present invention is that a virtual utility businessmodel is provided that allows individual solar installations to begrouped together into a cooperative or portfolio, where powerproduction, equipment repairs and downtime, incentives, and energycontracts are managed as a single entity.

Another advantage of the present invention is that a business tuningbusiness model is provided that provides the feedback to the operationof a solar energy installation and installer that is useful in tuningfor better efficiency and economy.

An advantage of the present invention is that a business model isprovided that salvages the tax-advantages and benefits that wouldotherwise be lost by solar installations that are too small ornon-qualifying into groups and leaseholds that can be operated on alarger scale to attract better construction and operation capital, andqualify for various government tax incentives and clean energy programs.

Another advantage of the present invention is that a business model isprovided that simplifies a user's installation, use, and maintenance ofa solar energy system.

These and other objects and advantages of the present invention will nodoubt become obvious to those of ordinary skill in the art after havingread the following detailed description of the preferred embodimentswhich are illustrated in the drawing figure.

IN THE DRAWINGS

FIG. 1 is a functional block diagram of a business model embodiment ofthe present invention;

FIG. 2 represents an administrative services embodiment of the presentinvention, and comprises demonstrating financial value and coordinatingrebate and tax incentives to arrange for financing;

FIG. 3A represents a community installation comprising individualPowerStations. The individual users of are banded together in acommunity project by a system integrator;

FIG. 3B represents a variation on a community installation in whichemployees of an employer are provided with a discounted solar system asa perquisite, and the employer benefits from renewable energy credits(REC's);

FIG. 4 represents a SolarGuard system embodiment of the presentinvention, many PowerStations produce renewable energy from the sun, andeach has a SolarGuard monitor that reports key operating informationabout their particular systems;

FIG. 5 represents an in-field sales method of operating a solar energybusiness; and

FIG. 6 represents an installer services business model embodiment of thepresent invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

FIG. 1 represents a PowerStation™ embodiment of the present invention,and is referred to herein by the general reference numeral 100.PowerStation 100 is typically located at an owner's home, and comprisesphotovoltaic solar panels 102 that convert sunlight into low-voltage DC.The DC can be stored in batteries, or it can be further converted into110 VAC or 220 VAC by an inverter 104. An electric panel, or breakerbox, 106 has the fuses and circuit breakers that distribute electricityto the user's electrical loads. Any excess electrical power from theinverter 104 will push back through a utility meter 108, and canactually run it backwards. A utility grid may be under contract or otherlegal obligation to accept and pay for such excess power produced. Oftenretail rates apply.

A SolarGuard™ monitor 110 tracks the performance of the solar system andreports the data to a central location over the Internet. The monitoringmakes sure the system is producing solar energy at optimum levels, andcomputed data is made available on a webpage. A PowerPortal™ 112 allowsusers to log in to a secure website to check the system performance, asreported by the SolarGuard monitor 110. Users can find out how muchpower the system is generating at any time.

Each PowerStation 100 can be standardized or unique, configured to thecustom specifications of each user. In a business model embodiment ofthe present invention, a system integrator goes to the location todetermine the best size, mounting arrangement and positioning for thePowerStation 100. A detailed design and installation plan can then beengineered.

PowerStations 100 work in parallel with the electric utility grid,allowing electricity to be generated during the day, and loads to drawfrom the grid during the night. In many areas, the system integratorsets up a net metering relationship with the local utility, enablingusers to sell excess power back to the utility during peak hours whenrates are high, and to buy electricity during non-peak hours when therates are low.

FIG. 2 represents an administrative services embodiment of the presentinvention, and is referred to herein by the general reference numeral200. Administrative services 200 comprises demonstrating financial value202 and coordinating rebate and tax incentives 204 to arrange forfinancing 206. Plans are submitted so building permits and inspections208 can be obtained for construction 210 of the solar system, as inFIG. 1. The involved utilities are coordinated with interconnectionadministration 212 and the solar system is put into operation 214. Areturn-on-investment (ROI) is maximized 216 and maintenance 218 servicemay be negotiated. At an end-of-life 220, or end-of-lease, the fullvalue of the installation of the solar system is realized for the user,the lender, the system integrator, and the government

Demonstrating the financial value 202 includes sending experts to thesite and discovering how energy is used. The financial incentivesavailable are identified, including rebates, tax, and special programsthat a user or their business may be eligible. The system integratorobtains and completes the paperwork and follow-up required Lo receivestate rebates. The financing can include floating rebate incentives, byonly billing for the post-rebate amounts. Tax documentation is providedto enable a tax advisor to file the appropriate tax returns to takeadvantage of the available tax credits and deductions. Building permits,inspections, and all interactions with local permit offices arecoordinated by the system integrator, and representatives are presentduring the final site inspection to deal with any issues that come up.

The system integrator further initiates the necessary agreements withthe local utility company and schedules the required site inspections. Apayment strategy is tailored to meet the user's needs and designed tomake good financial sense well into the future.

The SolarGuard monitor 110 enables continuous monitoring of the keyperformance variables of the system, and transmit the data through theInternet to specialized servers. If the system is underperforming,alerts are sent to call attention to the situation. The collected datais accessible online for customers or other approved entities to view.

During the investigation and design phase, an expert may consult on howthe user can lower their energy consumption and increase the savings.Each energy efficiency expert evaluates the insulation, ill-fittingwindows and doors, old and outdated light fixtures, thermostat settings,office equipment with go power-save modes when not in use, occupancysensors that automatically turn off lights when a room is vacated,heating and cooling systems, and which utility rate schedule will beoptimal.

Finance products include power purchase agreements (PPA's) and leases.Non-taxable customers are provided with solar energy power and monthlypayments that are often less than their current utility bill, withlittle or no up-front costs and off-balance sheet solutions. The PPA'shelp guard a company against the destabilizing effects of rising utilityprices. The organization's risk is reduced by paying only for what thesystem produces under the PPA or lease.

Public and non-profit organizations can implicitly benefit from the taxincentives for which they would otherwise not be eligible, and rebatesavailable through local, state, and federal governments. Theseincentives are significant, and can amount to more than 75% of the totalsystem cost.

Generating clean energy has a social utility and can produce goodwillthat translates directly into better business.

One return-on-investment (ROI) on a solar system comes from the avoidedcost of utility bills that would have been paid instead of solar power.Most organizations see returns of 8-15% on their solar investments. InCalifornia, where grid electricity costs have consistently risen by morethan 5% per year, the ROI is even better. The cost of a solarinstallation can usually be recovered within 5-7 years, depending onwhere the customer's facility is located, and how much electricity theyuse.

Utility companies will often bill customers with tiered rates ortime-of-use, rather than on flat fee basis. For a tiered rate, the planbegins with a baseline allocation of power. The more “units” ofelectricity customers consume above that baseline, the more they pay perunit. Solar power replaces the higher-tiered power first by taking theload off the top. Customers can thus experience significant savingsimmediately.

When users switch to solar power in certain jurisdictions, such as ininvestor owned utilities in California, they can be converted to atime-of-use billing system. The rates are higher during peak hours thanduring off-peak hours. The solar system will produce when the sun isbrightest and the day is hottest, heavy air conditioner use and powerdemand on the grid makes these the peak times. Any power in excess ofwhat they use is sold back to the utility grid at retail prices. Atnight, the solar system stops producing, but the users draw from thegrid at much lower off-peak prices. During the spring and summer months,customers can accumulate credits. These can be used to offset thecustomer's energy use during the winter months with its shorter daylightperiods.

Finance leases, e.g., capital leases, conditional sales, or dollar buyout leases, may work best if the solar power user intends to keep theequipment after the end of the lease. The main advantage of this type oflease is that it gives the user the option to purchase the equipment fora nominal fee. Payment terms on finance leases tend to last close to theexpected useful life of the equipment.

True leases, also called tax leases, operating leases, or fair marketvalue (FMV) leases, do not typically last as long as the full expectedlife of the equipment. At the end of the lease, the user can choose tohave the equipment removed without incurring further obligations, orpurchase it at a fair market value. Payments on true leases generallytend to be lower than those on finance leases. The lessors have theopportunity to resell the equipment when the lease ends.

One of the main benefits of true leases is that lessors may be able tofully deduct their lease payments and claim incentives which accrue tothe equipment owner for tax purposes; these savings can be passed on tothe lessee in the form of lower rents. In contrast, the IRS considersfinance leases little more than installment purchase plans. As a result,although finance leases let customers spread the customer's paymentsover time, they are not tax advantaged in the way true leases are, andlessees frequently cannot utilize the tax incentives available to them.

A leveraged lease is a tax-advantaged, asset-based financing thattypically qualifies as an operating lease for accounting purposes, and atrue lease for tax purposes. It can provide 7-30 years of off-balancesheet financing priced below the lessee's alternative borrowing rate. Ina leveraged lease, a trust is established with equity and non-recoursedebt components. The transaction is structured such that the equityinvestor is considered to be the owner of the equipment, both foraccounting and tax purposes. From the lessee's perspective, the lease isan off-balance sheet financing with footnote disclosures.

A leveraged lease allows high-grade credit lessees to take advantage oftheir low cost of capital to achieve low stable rental rates over a15-25 year term. The system integrator arranges high leverage debtfinancing based upon the quality of the lease and user's credit rating.This attractive debt financing usually results in a lower cost ofcapital to the system integrator and therefore a lower lease rate forthe user. If the transaction meets minimum size requirements andincludes rapidly depreciable items, tax advantaged equities can beprovided to the project thereby further lowering the user's lease rate.Similar to the conventional lease, a leveraged lease is usuallystructured to qualify as an operating lease in accordance with GenerallyAccepted Accounting Principals (GAAP).

A lease which qualifies under financial accounting standards FASB 13 asan operating lease, has the following four criteria: (1) The lease termdoes not exceed 75% of the useful life of the equipment, (2) Title tothe equipment does not automatically pass to the lessee at the end ofthe lease term, (3) The lease can not have a bargain purchase option,and (4) The present value of the minimum rentals must be less than 90%of the equipment cost. An operating lease may not add balance sheetasset or liability, and the rental payments are treated as an operatingexpense. A True Lease is not necessarily an Operating Lease.

A structured operating lease can mean the lowest possible cost for acorporate client due to its use of a variable interest rate, lack ofamortization, and its short term. This lease type requires the lessee tomaintain complete economic control of the property as well as accept alleconomic risks and rewards of ownership. Unique to this structure, thelessee maintains responsibility for the residual value of the asset atthe end of the lease. At the end of the initial lease term, the lesseecan either renew the lease at the then prevailing rates and terms,purchase the property for the initial development or acquisition cost,or sell the property and generate either a gain or loss based upon thevalue at the time the option is exercised. This lease/financingalternative is structured to qualify as an operating lease in accordanceGAAP. It can also be based upon a fixed rate, which results in aslightly higher lease rate. This alternative is not available forproperties previously owned by the corporate client. Consequently,sale-leaseback transactions cannot be arranged using this alternative.

A single investor lease (SIL) is a tax-advantaged asset-based financingwhich typically qualifies as an operating lease for accounting purposesand a true lease for tax purposes. Depending on the customer's position,the SIL can provide 7-25 years of off-balance-sheet financing pricedbelow the client's alternative borrowing rate. The transaction isstructured so the lessee is not considered the owner for eitheraccounting or tax purposes. From the lessee's perspective, the lease isoff-balance sheet financing with a footnote disclosure. Such product isapplicable for new and used equipment, project financings and some formsof real estate. Benefits to customers can include improved earningsthrough lower rental payments, hedging against equipment obsolescence,attractive after-tax financing rates, and diversification of fundingsources.

In a business model embodiment of the present invention, a typicalsystem integrator purchases the major components for a renewable energysystem from large, established vendors. Solar panels usually have amanufacturer's warranty of twenty-five years, and the inverters aretypically warranteed for ten years. Such hardware presently representsabout 50% of the total system cost. A user 108 could be required tocover the cost of an inverter replacement after the inverter's warrantyexpires. The power output of a typical solar panel degrades about 0.5%per year, and will likely provide a useful life of thirty years.

The system integrator or a 3^(rd) party, provides some well-definedrepair and maintenance functions during the life of the installation.The operating performance of each installation is remotely monitored,e.g., to anticipate breakdowns and interruptions of revenue earning.Each project generally requires insurance against risk of theft, damage,etc.

Leases are generally more complex than a standard purchase. But, leasesallow customers to realize the best possible savings on going solar, andthey allow the customer to avoid substantial upfront capital costs ofinstalling a solar system. The benefit of federal incentives, whichwould otherwise go unclaimed, can be split between the customer, systemintegrator, and the investor. For tax purposes, such leases must qualifyas an operating lease. For generally accepted accounting procedure(GAAP) purposes, such leases can also qualify as an operating lease,although it may be possible to obtain different treatment for GAAP thanfor tax accounting.

System integrator leases are secured by the equipment, and may bestructured to be secured by a lien on the underlying real estate. Eachpotential lessee/customer is screened to meet credit acceptancecriteria. During the lease period, the customer makes lease payments.The payments may be flat across the life of the lease, or they may bestructured to escalate over time in step with energy cost inflation orsome other index. At around $200/month, depending on system size, manytypical homeowners will find that they can act in an environmentally andsocially responsible way while spending the same, or less, onelectricity costs.

Residential customers are given fair market value buyout options, whichare priced so that they would not fail one of the capital lease tests.At the end of the lease, each customer can choose to extend the leaseand continue making payments, purchase the system at a fair marketvalue, or end the relationship and return the equipment.

Making existing equipment more energy efficient is one way to meetgrowing energy demand. Energy efficiency projects can improve profits,help avoid power outages, and delay the need for new power plants. Theannual market for energy efficiency in the USA has been estimated at$200 billion. Typical energy efficiency projects have payback periods offive years or less. Energy efficient equipment can also increaseproperty values. A commercial building owner can generate $2-$3 in addedasset value for every one dollar invested in energy efficiency.

In a business model embodiment of the present invention, a systemintegrator finances, owns and/or manages non-residential energyefficiency projects. Combined energy efficiency retrofit projects forinvestment can include heating, ventilation and air conditioning (HVAC),high-efficiency lighting, motor and pump replacements, high-efficiencyrefrigeration systems, energy management and controls systems, highefficiency cogeneration systems, boiler and furnace replacements, etc.

Up to one hundred percent of the financing for the capital cost of aproject can be provided so customers are not required to make anysignificant project capital outlays. Whenever possible, efficiencyprojects are integrated with solar or other renewable energy systems, tobetter maximize combined economic, environmental and investmentbenefits.

A power purchase agreement (PPA) embodiment of the present inventionincludes a service contract between the system integrator and acustomer. The system integrator agrees to finance, own and operate asolar energy system at the customer's location and sell the electricityit generates to the customer for a pre-determined period. The systemintegrator agrees to offload the entire process of permitting,designing, procuring, and installing the system. It owns and operatesthe system, including operations, maintenance, and insurance. Thecustomer has the option to buy the system. The customer provides aninstallation site, and access to site for operations and maintenance,e.g., by land lease or recorded easement. Such projects can be cash flowpositive from day one, as the customer only pays for power the systemgenerates, and benefits from long-term fixed energy price for the fullterm of the contract. On the subject of the kinds of leases that wouldqualify for tax advantages, FASB 13, Accounting for Leases, establishesstandards of financial accounting and reporting for leases by lesseesand lessors. For lessees, a lease is a financing transaction called acapital lease if it meets any one of four specified criteria. If not, itis an operating lease. Capital leases are treated as the acquisition ofassets and the incurrence of obligations by the lessee. Operating leasesare treated as current operating expenses. For lessors, a financingtransaction lease is classified as a sales-type, direct financing, orleveraged lease. To be a sales-type, direct financing, or leveragedlease, the lease must meet one of the same criteria used for lessees toclassify a lease as a capital lease, in addition to two criteria dealingwith future uncertainties. Leveraged leases also have to meet furthercriteria. These types of leases are recorded as investments underdifferent specifications for each type of lease. Leases not meeting thecriteria are considered operating leases and are accounted for likerental property.

Operating leases are accounted for by the lessor in three ways. Theleased property is included with or near property, plant, and equipmentin the balance sheet. The property is depreciated according to thelessor's normal depreciation policy, and in the balance sheet theaccumulated depreciation is deducted from the investment in the leasedproperty.

Or, rents are reported as income over the lease term as it becomesreceivable according to the provisions of the lease. However, if therentals vary from a straight-line basis, the income are recognized on astraight-line basis unless another systematic and rational basis is morerepresentative of the time pattern in which use benefit from the leasedproperty is diminished, in which case that basis are used.

Lastly, initial direct costs are deferred and allocated over the leaseterm in proportion to the recognition of rental income. However, initialdirect costs may be charged to expense as incurred if the effect is notmaterially different from that which would have resulted from the use ofthe method prescribed in the preceding sentence.

Embodiments of the present invention are not limited to these specifickinds of leases, since leasing rules can change significantly in thefuture.

The sale of property subject to an operating lease, or of property thatis leased by or intended to be leased by the third-party purchaser toanother party, is not treated as a sale if the seller or any partyrelated to the seller retains substantial risks of ownership in theleased property.

A seller may, by various arrangements, assure recovery of the investmentby the third-party purchaser in some operating lease transactions andthus retain substantial risks in connection with the property. Forexample, in the case of default by the lessee or termination of thelease, the arrangements may involve a formal or informal commitment bythe seller to

-   -   (a) acquire the lease or the property,    -   (b) substitute an existing lease, or    -   (c) secure a replacement lessee or a buyer for the property        under a remarketing agreement. However, a remarketing agreement        by itself does not disqualify accounting for the transaction as        a sale if the seller    -   (a) will receive a reasonable fee commensurate with the effort        involved at the time of securing a replacement lessee or buyer        for the property and    -   (b) is not required to give priority to the re-leasing or        disposition of the property owned by the third-party purchaser        over similar property owned or produced by the seller. For        example, a first-in, first-out remarketing arrangement is        considered to be a priority.

If a sale to a third party of property subject to an operating lease orof property that is leased by or intended to be leased by thethird-party purchaser to another party is not to be recorded as a sale,the transaction are accounted for as a borrowing. Transactions of thesetypes are in effect collateralized borrowings. The proceeds from thesale are recorded as an obligation on the books of the seller. Untilthat obligation has been amortized under the procedure described herein,rental payments made by the lessee(s) under the operating lease orleases are recorded as revenue by the seller, even if such rentals arepaid directly to the third-party purchaser.

A portion of each rental may be recorded by the seller as interestexpense, with the remainder to be recorded as a reduction of theobligation. The interest expense are calculated by application of a ratedetermined in accordance with the provisions of APB Opinion No. 21,Interest on Receivables and Payables, paragraphs 13 and 14. The leasedproperty is accounted for, as prescribed in paragraph 19(a) for anoperating lease, except that the term over which the asset isdepreciated are limited to the estimated amortization period of theobligation. The sale or assignment by the lessor of lease payments dueunder an operating lease are accounted for as a borrowing.

Solar can be an expensive, complex undertaking if each homeowner triesto calculate the return on a major investment, find a reliableinstaller, and learn about inverters and time-of-use metering. Theshared knowledge and camaraderie of a community program makes eachproject much easier and more profitable.

FIG. 3A represents a community installation 300 comprising individualPowerStations 301-304. The individual users of PowerStations 301-304 arebanded together in a community project by a system integrator 306.Various equipment suppliers 308 and 310 are contracted by the systemintegrator 306 to supply the necessary components for the constructionof PowerStations 301-304 at a substantial discount. Discounts arepossible because of the volume of equipment involved in a singlecontract, the geographical proximity of multiple accounts, and inrespect of an on-going business relationship between system integrator306 and equipment suppliers 308 and 310. Similarly, system integrator306 enters into power purchase agreements (PPA) with a power utility 312in which the individual users of PowerStations 301-304 sell their excessenergy in large contracts otherwise only possible between utilities.

Community efforts go a long way toward bringing solar energy to themasses and making a bigger difference in the fight against globalwarming. The bulk discounts mean homeowners benefit from economies ofscale, making it cheaper to convert to solar and quicker to receive apayback on the investment. Consumer awareness about solar powerincreases, which aids future sales efforts.

By signing up clusters of homes, the system integrator 306 benefits fromeconomies of scale in equipment purchases, engineering, installation andpermitting. In a typical program, a community 300 that collectivelypurchases a total of 175 kilowatts of solar capacity can qualify fordiscounts off market prices for equipment and installation. A typicalhome under the program would thus pay around $8.00 a watt for a threekilowatt solar system, compared to a market price of $10 a watt for thesame solar system.

After factoring-in a state rebate and a federal tax credits for solarenergy, and the cost of city permits, the total investment would besubstantially reduced. By generating their own power and selling excesspower back to the grid, homeowners can sharply lower or eliminate theirelectric utility bills.

FIG. 3B represents a variation on community installation 300. Anemployee group 350 includes individual installation, e.g., asrepresented PowerStations 301-304. The individual users of PowerStations301-304 are employees of an employer 352 who wants to provideperquisites to its employees and benefit, e.g., from renewable energycredits (REC's). The installations are gathered together in a groupproject by system integrator 306. A certifying agency 354 empowers thesystem integrator 306 to verify energy production, aggregate partialREC's, and certify the REC's it issues to the employer 352.

FIG. 4 represents a SolarGuard system embodiment of the presentinvention, and is referred to herein by the general reference numeral400. System 400 communicates with many PowerStations 401-408 thatproduce renewable energy from the sun. Such solar power installationsare like that described in FIG. 1, and each can be related to the otherby location, who was their system integrator, who was their financer,who was their lessor, community interests, government jurisdiction, etc.Each has a SolarGuard monitor 110 (FIG. 1) that reports key operatinginformation about their particular systems. For example, data reportscan be collected periodically about current/voltage/power coming fromthe solar panels 102 (FIG. 1), outside temperatures at their respectivelocations, operating temperature of the inverter 104 (FIG. 1), userelectrical loads supplied by electrical panel 106 (FIG. 1), utilitymeter 108 readings, condition of the utility grid at that feedpoint,occupancy sensors, building temperature, etc. The information collectedis identified by station ID and forwards through the Internet 410 to aSolarGuard server 412.

The data collected is separated and post-processed for several differentinformation-fed business models. Such business models includemaintenance 414, monitoring 416, business tuning 418, renewable energycertificate programs 420, virtual utility 422, performance guarantees,insurance, data sales, etc.

Maintenance business model 414 operates to spot trouble in theequipment, or the way it's being operated, at each PowerStation 401-408.Each of the data points being monitored has a normal range, andexcursions outside these normal bands can be an early signal of trouble.However, some measures normally fluctuate as dependent variables on someindependent variable. For example, the time-of-day and day-of-the-yearcontrol whether there should be any sunlight at all. The solar panels102 cannot be expected to produce an electrical output between localsunset and sunrise. But if the solar panels 102 are not producing duringdaylight hours, then there may be a problem that needs to be analyzed orinvestigated further. Solar panel power output measurements can also becompared to past measurements, averages, and what other nearbyPowerStations 401-408 are doing at the moment.

Maintenance business model 414 operates to remedy trouble. In somecases, the trouble might be fixed by downloading new software orparameters to the respective SolarGuard monitor 110. In other cases, anemail or phone call to the user might do it. In more serious ordifficult situations, a repair crew can be sent out.

Maintenance business model 414 may also collect and analyze long-termtrends to spot equipment supply problems, user misunderstandings, andrecalls and retrofits. Conventional methods could be used in a suitablemaintenance program.

Monitoring business model 416 operates to monitor power output fromparticular installations and to help sharpen forecasts of what thesesystems are really capable of. The data collected can be analyzed andused in sales to tell customers what they can expect in the way ofperformance and up-time, and in power-purchase-agreements to confidentlycontract for maximum production commitments.

Monitoring business model 416 further operates to load manage power atdiscrete installations, e.g., to balance loads amongst installations inan area during peak times, or to shift loads from peak times to off-peaktimes at particular locations.

Business tuning business model 418 collects information to help thesales department give better pricing estimates and fit the expectedenergy production to the customer's needs.

Renewable energy certificate business model 420 accumulates,distributes, or otherwise sells “green tags”. According to Wikipedia,renewable energy certificates (REC's), also known as green tags,renewable energy credits, or tradable renewable certificates (TRC's),are tradable environmental commodities that represent proof that onemegawatt-hour (MWh) of electricity was generated from an eligiblerenewable energy resource. Before the present invention, it wasn'tpossible or practical for a small individual solar system installationto participate in REC trading markets

These certificates can be sold and traded and the new owner of the RECcan claim to have purchased renewable energy. While traditional carbonemissions trading programs promote low-carbon technologies by increasingthe cost of emitting carbon, REC's can incentivize carbon-neutralrenewable energy by providing a production subsidy to electricitygenerated from renewable sources.

Wikipedia says, in states which have a REC program, a green energyprovider is credited with one REC for every 1,000 kWh or one MWh ofelectricity it produces. An average residential customer consumes about800 kWh in a month. A certifying agency gives each REC a uniqueidentification number to make sure it doesn't get double-counted. Thegreen energy is then fed into the electrical grid, and the accompanyingREC can then be sold on the open market.

According to the Green Power Network, prices of REC's can fluctuategreatly (2006: from $5-$90 per MWh, median about $20). Prices depend onmany factors, such as the location of the facility producing the REC's,whether there is a tight supply/demand situation, whether the REC isused for RPS compliance, even the type of power created. While the valueof REC's fluctuate, most sellers are legally obligated to “deliver”REC's to their customers within a few months of their generation date.Other organizations will sell as many REC's as possible and then use thefunds to guarantee a specific fixed price per MWh generated by a futurewind farm, for example, or making the building of a solar power homefinancially viable.

The income provided by REC's, and a long-term stabilized market for tagscan generate the additional incentive needed to build renewable energysystems. One of the few non-profit U.S. organizations that sell RECs,Bonneville Environmental Foundation was instrumental in starting themarket for RECs with their Green Tag product. They use the profits fromGreen Tags to build community solar and wind projects and to fundwatershed restoration. Another non-profit currently selling RECs isConservation Services Group, which sells ClimateSAVE RECs generated fromwind, solar, and hydropower.

The virtual utility business model 422 allows for the organization ofenergy syndications, risk portfolios, and demand/load management. Someor all of the PowerStations 401-408 can be brought together in acollective in which they produce and demand power in a coordinatedfashion. The collective can enter into energy sharing and usagecontracts with the local utility, and thus be able to buy off-peak powerand sell on-peak power at attractive rates that are better than anyindividual or single business could manage on their own.

In a risk portfolio, the PowerStations 401-408 can all be broughttogether in a form of group insurance that protects each one of themfrom individual equipment failures and loss of production. The expenseand risk of point failures is shared by all.

In a demand/load management model, a virtual utility contracts with autility to limit individual point demand or total demand from a utility.It may agree to rolling outages, etc. Controls can be installed at eachsite to shed loads that are optional or discretionary, on request, orautomatically.

FIG. 5 represents a method of operating a business, and is referred toherein by the general reference numeral 500. A systems integrator 502 isengaged in the business of selling, installing, and operating renewableenergy systems for individual users 504. For example, a typical user 504would be the resident of a single-family home in the suburbs.

The system operator 502 prearranges investors and lenders inanticipation of sales, in a step 506. Credit services are engaged in astep 508 that would allow the system integrator 502 to secure lendingand/or investment commitments, e.g., over the phone, while in the fieldat a user's home. These could be supported by portable computers andwireless Internet access. The system operator 502 has an on-goingprogram, in a step 510, to collect operating data about the performanceof its previously installed systems, e.g., as described in connectionwith FIG. 4. Such data is analyzed to produce forecast models in a step512 for various proposed systems. Open-membership groups are created ina step 514 that would allow a new user 504 to join-in on a preexistingvirtual utility, PPA, community installation, etc.

In a step 516, a new user 504 shows interest and/or investigates thepurchase of a solar system, e.g., as in FIGS. 1-3. The system integrator502 makes an in-field sales call 518 in which the costs/benefits aredescribed, and pro-forma systems configurations and performance/benefitforecasts are demonstrated. For example, with the help of a portablepersonal computer and wireless Internet. If sold, the user 504 makes acommitment 520 and signs a contract 522. Credit services 508 are usedon-the-spot in the field to fund/close the deal, and the new user 504joins the open-membership group to share in their collective benefits.

Method 500 generates all the necessary contracts, rebate coupons,renewable energy certificates, tax credit forms and supportingdocumentation, in a step 524, and distributes these and the profits tothe various stakeholders.

The solar system, e.g., is installed in a step 526 with projectmanagement 528 provided by the system integrator 502. During use 530,the system installation is monitored in a step 532 and troubleshootingis used to access any anomalies. Repairs 534 are effectuated, e.g., byservice calls 536.

FIG. 6 represents an installer services business model embodiment of thepresent invention, and is referred to herein by the general referencenumeral 600. A first group 610 of solar installations is represented byuser systems 611-614. These are installed by a small installer 616. Asecond group 620 of solar installations is represented by user systems621-624. These are installed by another small installer 626. Installers616 and 626 do not operate on a large enough scale to have a significantdegree of bargaining power with suppliers, utilities, investors,financial institutions, etc. They may also lack the sophisticated tools,models, and monitoring facilities that a large system integrator 630has. So, system integrator 630 provides or coordinates financial, legal,business, and other services that they have bargained for withfinancial, legal, business and other institutions 632, 634, 636, etc.Each small installer 616 and 626 may be supplied by their own suppliers640 and 642, but the market power exerted by large system integrator 630allows it to use a special relationship or agreement with supplier 642to provide special equipment at attractive discounts.

Although the present invention has been described in terms of thepresently preferred embodiments, it is to be understood that thedisclosure is not to be interpreted as limiting. Various alterations andmodifications will no doubt become apparent to those skilled in the artafter having read the above disclosure. Accordingly, it is intended thatthe appended claims be interpreted as covering all alterations andmodifications as fall within the true spirit and scope of the invention.

1-6. (canceled)
 7. A method comprising: collecting operating data from aplurality of solar power stations associated with a syndicate ofindividual operators across a network in a server, the operating datacomprising electrical power output data for each of the solar powerstations, wherein the solar power stations are collectively operated bythe syndicate; retrieve electrical rate data from an electric utilityacross the network in the server; analyzing, at the server, theoperating data and the electrical rate data on the server to generateelectrical power exchange data; and sending the electrical powerexchange data from the server to one or more solar power stations acrossthe network, wherein the solar power stations, in accordance with theelectrical power exchange data, selectively connect to an electricutility grid.
 8. The method of claim 7 wherein the electrical powerexchange data comprises information for coordinating production ofelectrical power by the solar power stations as part of a distributedelectrical energy plant and distributing the electrical power for afixed fee rate.
 9. The method of claim 7 wherein the electrical powerexchange data comprises information for coordinating electrical powerproduction of the solar power stations.
 10. The method of claim 7wherein the electrical power exchange data comprises information forcoordinating electrical power demand for the solar power stations. 11.The method of claim 7 further comprising collecting periodic updates tothe operating data, and in response thereto, generating updatedelectrical power exchange data, and sending the updated electrical powerexchange data to the solar power stations over the network.
 12. Themethod of claim 7 wherein the electrical utility rate data is specificto the syndicate of individual operators.
 13. The method of claim 12wherein the electrical utility rate data further includes negotiatedlimits on point demand for individual operators of the syndicate. 14.The method of claim 12 wherein the electrical utility rate data furtherincludes negotiated limits on total demand for the entire syndicate. 15.The method of claim 12 wherein the electrical utility rate data furtherincludes localized time-dependent constraints for operating each of thesolar power stations.
 16. The method of claim 7 further comprisingreceiving one or more payments from the individual operators accordingto the electrical power exchange data, and sending a combined paymentcomprising multiple payments from the individual to the electricalutility.
 17. A server computer comprising a processor; a memory coupledto the processor; and a network interface, wherein the memory comprisescomputer readable code, that when executed, causes the processor tocollect operating data from a plurality of solar power stationsassociated with a syndicate of individual operators through the networkinterface, the operating data comprising electrical power output datafor each of the solar power stations, wherein the solar power stationsare collectively operated by the syndicate; collect electrical rate datafrom an electric utility through the network interface; analyze theoperating data and the electrical rate data and, in response thereto,generate electrical power exchange data; and send the electrical powerexchange data from the server to one or more solar power stationsthrough the network interface, wherein the solar power stations, inaccordance with the electrical power exchange data, selectively connectto an electric utility grid.
 18. The server computer of claim 15 whereinthe electrical power exchange data comprises information forcoordinating production of electrical power by the solar power stationsas part of a distributed electrical energy plant and distributing theelectrical power for a fixed fee rate.
 19. The server computer of claim15 wherein the electrical power exchange data comprises information forcoordinating electrical power production of the solar power stations.20. The server computer of claim 15 wherein the electrical powerexchange data comprises information for coordinating electrical powerdemand for the solar power stations.
 21. The server computer of claim 15wherein the computer readable code further causes the processor tocollect periodic updates to the operating data, and in response thereto,generating updated electrical power exchange data, and sending theupdated electrical power exchange data to the solar power stations overthe network.
 22. The server computer of claim 15 wherein the electricalutility rate data is specific to the syndicate of individual operators.23. The server computer of claim 22 wherein the electrical utility ratedata further includes negotiated limits on point demand for individualoperators of the syndicate.
 24. The server computer of claim 22 whereinthe electrical utility rate data further includes negotiated limits ontotal demand for the entire syndicate.
 25. The server computer of claim22 wherein the electrical utility rate data further includes localizedtime-dependent constraints for operating each of the solar powerstations.
 26. The server computer of claim 15 wherein the computerreadable code further causes the processor to receive one or morepayments from the individual operators according to the electrical powerexchange data, and to send a combined payment comprising multiplepayments from the individual to the electrical utility.